Presentation Transcript

1. California Desert Air Working Group WINDS OF CHANGE

   Harnessing Desert WindstoReduce GHGs and Energy Costs

   Kevin Kelley VP - Process Technology & Sustainability US Cement Operations CEMEX, Inc. November 13, 2013 Las Vegas, NV
2. A Global Building Materials Company 47% Presence in 50 countries >43,900 employees Annual production capacity of 94.8 million metric tons of cement 55 million cubic meters of ready-mix concrete 159 million metric tons of aggregates Operate globally 57 cement plants 1,899 ready mix concrete facilities 371 aggregate quarries 221 land-based distribution centers 69 marine terminals U.S. operations in 33 states 13 cement manufacturing facilities 320 ready-mix concrete plants 100 aggregate quarries 46 cement terminals 38% 15% % worldwide product sales 2012
3. Large Presence in California Cement One cement plant (Victorville) ~3 Million stonsof capacity Two active import terminals Three active domestic terminals Ready-Mix 49 active plants ~3.8 Million yds3sold during 2012 Aggregates 13 active quarries ~9.8 Million stonssold during 2012 Cement Plant Ready-Mix Plant Aggregate Quarry Import Terminal Domestic Terminal Asset footprint as of Sept 30th, 2013. Portable ready-mix plants not shown.
4. Production Portfolio CEMEX produces a wide variety of building materials Limestone Clay CLINKER CEMENT READY-MIX CONCRETE Iron ore Sand Other cementitious materials; such as pozzolan, slag, and fly ash Gypsum Gravel Sand AGGREGATES Water Our carbon strategy is designed to reduce the environmental impacts of all our production operations
5. CEMEX Elements of Sustainability The health, safety, and wellbeing of our people are of paramount importance to us and we continually monitor our safety progress to ensure that our programs are working as effectively as possible. We are committed to mitigating the impacts that our plants can have on surrounding communities. We have implemented a set of environmental initiatives to support air and water quality, land management, and conservation efforts. We leverage our core strengths, our employees’ talent and time, and our social investments to support the social and economic development of our communities. We continue to implement cutting-edge technologies and state-of-the-art kilns to improve the energy efficiency of our operations. CEMEX provides transparency into our operations through annual environmental, health and safety (EHS) reports and through our comprehensive sustainable development reports.
6. US GHG Emissions by Sector One-third of America’s GHG emissions comes from power sector. By using green power, WE can dramatically reduce GHG emissions and help transition the United States to cleaner energy sources.
7. Reducing GHG’s in Cement Manufacturing Reduce energy consumption Replace traditional fossil fuels with carbon neutral alternatives Reduce clinker content in cement (clinker factor) Increase use of renewable energy sources
8. Renewable Energy Incentives California has most ambitious Climate Change goals of all states In 2002, California Renewables Portfolio Standard (RPS) was established Requires electric corporations to increase procurement from eligible renewable energy resources by at least 1% of their retail sales annually, until they reach 33% by 2020 The penalty for non-compliance is $50/MWh, up to $25MM/yr Tradable Renewable Energy Credits (RECs) can be used for compliance with the RPS In 2006, AB32, “The California Global Warming Solutions Act” was enacted Instructs the California Air Resources Board (ARB) to develop regulations and market mechanisms to reduce CA’s GHG emissions Requires the state's GHG emissions be reduced to 1990 levels by 2020 (~25% reduction)
9. Renewable Energy Incentives CA provides many incentives for self-generation wind projects Self-Generation Incentive Program (SGIP) Provides financial incentives for installing new, qualifying self-generation equipment Qualifying technology includes wind turbines and fuel cells For projects up to 5 MW that provide a portion or all of electric load Program expires January 1, 2016 Net Metering For solar, wind, biogas, and fuel cell generation facilities Financial credit for power generated and fed back to the utility, which is used to offset the customer's electricity bill, or Power is bought by utility at avoided cost Up to 1 MW to serve all or a portion of onsite electricity needs Assembly Bill 228 seeks to increase limit to 5 MW for wind and solar
10. Renewable Energy Incentives Federal incentives are also available Federal Renewable Electricity Production Tax Credit (PTC) A per-kilowatt-hour federal tax credit for electricity generated by qualified energy resources and sold by the taxpayer to an unrelated person during the taxable year Credit of $22/MWhfor wind The duration of the credit is 10 years after the date the facility is placed in service Renewable Energy Credits (RECs) Tradable, non-tangible energy commodities Represent proof that 1 MWh of electricity was generated from an eligible renewable energy resource Energy Investment Tax Credit (Accelerated Depreciation) Wind power generation is classified as five-year property under the MACRS
11. Define Opportunities within Incentives Identify and evaluate possible sites in California Consider generation capacity/wind patterns Consider future use of site Coordinate with: Legal Contract negotiations Engage counsel with experience in California renewable energy Planning Projected cost of electricity Quarry operational life Operations Project fundamentals Technical feasibility Environmental Environmental restrictions Permitting Real Estate Mineral and surface rights Exploitation plans Use cookie-cutter approach to develop projects at other sites Identify and evaluate possible sites in the US
12. Renewable Energy Opportunities CEMEX reviewed 21 sites in California for wind turbines Moosios, Madera Rockfield, Friant Eliot, Pleasanton Victorville Lemon Cove Corona Cache Creek, Madison Kerlinger, Tracy Lytle Creek, Rialto Clayton Sunol Olympia, Felton Harbor Sand & Gravel, Redwood City Patterson, Sheridan Redlands Moorpark Red Hill, Little Lake Lapis Industrial Sand/Marina, Salinas Jesse Morrow, Fresno Soledad, Santa Clarita Vernalis, San Joaquin
13. Renewable Energy Opportunities Selected 6 sites based on generating capacity and consumption
14. Renewable Energy Opportunities Narrowed to 3 sites to initially develop wind projects Cache Creek (Madison) Aggregate Facility 1.5 MW turbine Estimated power generation of 1.8 GWh/yr @ 30% wind availability Estimated CO2 savings of 1,400 tons CO2 per year Moorpark Aggregate Facility 1 MW turbine Estimated power generation of 1.5 GWh/yr @ 30% wind availability Not permitted Victorville Cement Facility Project to be located in two sites: Quarry Plant: 2 x 1.5 MW turbines (3 MW total) River Plant: 2 x 1.6 MW turbines (3.2 MW total) Estimated power generation Quarry Plant: 7.4 GWh/yr @ 26% wind availability River Plant: 6.4 GWh/yr @ 23% wind availability Estimated CO2 savings of 9,900 tons CO2 per year
15. Partnered with Experienced Developer Terms of PPA (Power Purchase Agreement) Developer - Foundation Windpower Based in Menlo Park, California Finances, builds, operates, and maintains wind turbines Structured to be off-balance No guarantees, no financial obligations are provided No CEMEX investment required Associated with a CEMEX zero-cost land lease Supply agreement: We pay for what we consume Fixed price with annual escalation Lower than current rate No volatility. Rate not related to fuel prices Known, stable price for 20 years 20 year term with extension option CEMEX keeps environmental credits
16. Economics Not Always Favorable Not a perfect system Departing Load Fee CA charges customers who self-generate in order to service the cost of capacity that has been built Reduces the incentive to build renewable energy projects Base Interruptible Program (BIP) Rebate offered by utilities for customers who agree to shut down capacity at the utility’s request in the event of power shortages The benefit is higher during summer peak demand periods, which makes wind generation uneconomical during those periods. Standby Tariff Designed for utility to be compensated for maintaining capacity for servicing self generators during their maintenance or downtime. Charges vary state by state, with some states being more punitive than others. In CA, they penalize some self generators while rewarding others (mainly the larger users).
17. Committed to Sustainable Manufacturing CEMEX utilized California SGIP funds to install 5 wind turbines that supply a portion of electrical energy needs to 3 California facilities Madison Quarry Victorville Quarry Victorville River
18. First Successful Wind Turbine Project
19. Another Successful Wind Turbine Project
20. Questions & Answers Thank you Help Make a Difference